India: Ferro silicon prices drop to 9-month low amid low demand

Ferro silicon producers had to lower their offer levels again this week to close deals.

SteelMint observed that prices have fallen to 9-month lows.

The market has been experiencing limited demand since the last two months.

According to the assessment on 10 June 2022, Guwahati producers’ offers were at INR 125,000/t exw, dropping by INR 3,000/t w-o-w while Bhutan’s offers fell by INR 1,250/t exw w-o-w with prices hovering at around INR 126,750/t exw.

Factors edging down prices:

• Moderate demand: Market activity was low to moderate, with only small quantities being traded. SteelMint did not hear of any bulk deals concluded this week. The Steel Authority of India (SAIL), however, is expecting to conduct a reverse auction for around 18,000 tonnes by the end of the month. It may create a shortage in the domestic market, and the exact market picture will emerge after the auction.
• Market participants are in wait-and-watch mode: Major steel producers have already booked material while smaller mills are in wait-and-watch mode in anticipation of further fall. In contrast, some producers are still waiting for demand to pick up, while others are focused on SAIL’s upcoming reverse auction. The rest have reduced offers marginally to increase buying.
• Low stainless steel production: Stainless steel production varied from region to region, according to demand and inventory, which also affected ferro silicon prices amid limited buying. However, stainless steel prices have started to improve as domestic inquiries are increasing, but it will take a moment for the market to mature, according to sources.

China market overview

China’s ferro silicon prices inched up by RMB 100/t to RMB 9,400/t exw-Inner Mongolia due to active purchases from steel mills after easing of Covid restrictions. Meanwhile, ferro silicon futures on the Zhengzhou Commodity Exchange (ZCE) for September delivery rose by 4% w-o-w to RMB 9,718 /t on 10 June 2022.

Outlook
Prices of ferro silicon are expected to remain stable this week. Meanwhile, steel demand is still down which is another detrimental sign for the alloy manufacturers.